Emporia, a town in Virginia, experienced a significant economic setback when the Georgia-Pacific plywood mill announced its closure, resulting in the loss of 550 jobs.
This follows a similar blow last year when the Boar’s Head Provision Co. meat plant in nearby Jarratt, Greensville County, also shut down. Together, these closures highlight the struggles the community faces in maintaining major employers.
A Struggling Community: Emporia’s Challenges
In less than a year, Emporia and Greensville County have lost two major plants, which is a serious blow for any community.
The Boar’s Head closure, linked to a listeria outbreak that caused deaths nationwide, was not directly influenced by public policy.
However, Georgia-Pacific’s closure was tied to a downturn in the housing market, which is much more connected to public policies.
The impact on workers in Emporia is significant, as neither political party has managed to devise an effective solution to the rising housing prices that are contributing to this economic hardship.
Housing Prices: The Key Issue
Georgia-Pacific’s statement pointed to two key factors affecting their plywood business: housing affordability challenges and a 30-year low in existing home sales.
These trends have had a direct impact on industries like plywood production, as many of these materials are used in home renovations and repairs, which tend to occur when homes are sold.
This problem has been developing for years, and it’s not something that can be attributed to a single politician or party. Both political sides have struggled to address the growing gap between housing prices and income.
Why Are Housing Prices Rising?
Housing prices have been escalating far beyond the pace of income growth. Between 2000 and 2023, home values increased by 162%, while incomes rose by only 78%, as reported by the LBM Journal.
This widening gap has led to a significant increase in the house-price-to-income ratio, making homeownership increasingly difficult for average Americans.
- Median Home Price in March 2024: The median price of a home in the U.S. surpassed $400,000 for the first time, according to the National Association of Realtors. This price hike is beneficial for sellers, but it poses a challenge for prospective buyers, especially those looking for affordable homes.
- Why are housing prices so high?: The surge in housing prices is mainly driven by the high demand for homes and limited supply. Low interest rates, favored by politicians to encourage borrowing, have made it easier to buy homes but have inadvertently driven up their prices. While demand is high, incomes haven’t risen fast enough to keep up with these price increases, which complicates the affordability issue.
Home Sales: At Their Lowest in Nearly 30 Years
In 2024, existing home sales in the U.S. hit their lowest level since 1995, marking a significant drop. Several factors contribute to this decline:
- High Housing Prices: Rising home prices are discouraging potential buyers.
- High Mortgage Rates: Many buyers are holding off on purchasing due to high interest rates.
- “Lock-in” Effect: Homeowners who bought houses when mortgage rates were lower are reluctant to sell, knowing that they would face higher rates on their next purchase.
- Economic Uncertainty: Broader concerns about the economy also contribute to the declining number of homebuyers.
Housing Starts: Stagnating Since 1995
Housing starts—the number of new homes being built—are also at their lowest levels since 1995, according to the Federal Reserve Bank of St. Louis. Although the housing market has seen some recovery since the Great Recession, it remains below the levels experienced in previous decades.
Despite some areas showing growth, such as construction along Peppers Ferry Road in Montgomery County, the national trend points to a supply shortage that exacerbates the issue.
Multiple Trends Hindering Housing Construction
Both political parties have recognized the issue of high housing prices, but effective solutions remain elusive. Governor Glenn Youngkin of Virginia, a Republican, has proposed increasing the housing supply to address the issue.
However, local opposition often derails these projects. Communities, regardless of political leanings, tend to resist large-scale housing developments due to concerns about location and impact on the neighborhood.
Additionally, a shortage of skilled trades workers further complicates efforts to boost housing construction. Political issues such as immigration restrictions and trade tariffs have also made construction more expensive. These obstacles mean that the construction sector is unable to meet the growing demand for new homes.
Demographic Challenges in Emporia and Surrounding Areas
Since the COVID-19 pandemic, many rural areas in the U.S. have seen an influx of people from urban centers. However, Emporia and surrounding counties have not benefitted from this trend.
In fact, these areas continue to experience population decline, with more people moving out than moving in.
- Greensville County has seen a 4.7% population decline since 2020, while Sussex County saw an 8.6% decrease, the largest in Virginia.
Moreover, Emporia faces a significant education gap. With 24.3% of its adult population lacking a high school diploma, Emporia ranks as the least-educated locality in Virginia, which further limits its economic prospects.
Addressing the Problem: The Need for Education and Housing Solutions
The long-term solution for Emporia and Greensville County lies in improving the educational level of its workforce. As the job market changes, the region will need to attract skilled workers to fill positions.
However, the larger issue of housing affordability still needs to be addressed at the national level to ensure that industries, like Georgia-Pacific, can thrive.
Emporia and surrounding areas are grappling with the consequences of a shrinking housing market, which has directly impacted key local industries. Despite efforts from both political parties, solutions for housing affordability and economic revitalization remain out of reach.
The path forward will require national action on housing policy, along with efforts to improve the education system to better equip the local workforce. Only then can communities like Emporia begin to recover and prosper once again.